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Zain, the leading mobile telecommunication operator in the Middle East and Africa with a commercial presence in 24 countries, is pleased to announce its consolidated financial results for the half-year ending 30 June 2009.

The results showed significant growth in many key indicators.

For the first half of 2009, Zain Group recorded impressive consolidated revenues of KWD 1.16 billion (US$4.014 billion), an increase of 24.1% compared to H1-2008. The company’s consolidated EBITDA increased by 46.3% for the same period to reach KWD 512.2 million (US$1.77 billion). Consolidated net income reached KWD 154.5 million (US$533.5 million), an increase of 4.4% on H1-2008. The earnings per share for the six month period were US$0.14.

Year-on-year customer growth on the two continents across which Zain operates was 37%, while serving 69.5 million managed active customers as of 30 June 2009.

Chief Executive Officer of Zain, Dr Saad Al Barrak: Commenting on the results, Zain Group CEO Dr Saad Al Barrak said: “Despite a challenging environment imposed by the global economic crisis, foreign currency fluctuations and the competitive markets in which we operate, not to mention the vast investments in network expansion, the Group was still able to achieve impressive and realistic levels of revenues and profitability for the first six months of 2009. This is a testament to the sound management practices and excellent operational performance of all our operations in the Middle East and Africa.”

Dr Al Barrak further added, “The nature and growth of the H1-2009 net income result is all the more impressive when one takes into account that in H1-2008 we had an extraordinary gain of KWD26.6 million (US$99 million) from the successful Zambia IPO, as well as the burden of a KWD 31.3 million (US$108.8 million) currency exchange loss for H1-2009. Both are an indication that operational net income growth is much higher than 4.4%. With improving currency stability in many of our African operations, we expect even better results in the second half of 2009.”

In recent years, Zain has invested heavily in network expansion and service offerings such as ‘One Network” on both continents, resulting in robust customer acquisition and healthy revenues, a strategy that Dr Al Barrak was keen to stress. “We expect to reap further financial rewards from these network investments, not only in the second half of 2009, but in the years ahead with our ground-breaking and customer alluring ‘One Network’ playing a vital role in such growth,” he said.

Additionally, the company has recently introduced ‘Drive11’, program that will see Zain focusing on customer-facing services and commercial activities, while centralizing and outsourcing certain back office/non-core functions to strategic partners. This program will maximize economies of scale and realize significant efficiencies, allowing Zain to provide communication services within an optimum cost structure.

The first major evidence of this was Zain Nigeria’s recent outsourcing deal with Ericsson, which is now responsible for the management of most of its network and field operations for its wireless networks and operational support systems, serving almost 4,000 sites across Nigeria.

“We expect ‘Drive2011’ to improve Zain’s operating margin by 5% within 12 months and provide the company the necessary thrust to capture the future growth potential of the markets in which we operate,” said Dr Al Barrak.

The addition of Palestine to Zain’s global footprint

Further to the merger agreement signed on 18 May 2009 between Zain Jordan and Paltel Group and the formal approval of the Paltel extraordinary general assembly, Paltel became the 24th country to join Zain’s global footprint and was consolidated within Zain’s second quarter 2009 results.

Mr Abdel Malik Al Jaber has been appointed CEO of the Zain’s Levant region and the company expects to rebrand the Palestinian operation to Zain during Q3, 2009. “The combination of both Zain Jordan and Paltel will produce a business group which will generate over US$1 billion of revenues, US$450 million in EBITDA and US$300 million in net income in 2009 alone,” said Dr Al Barrak.

Strategic review of Zain’s Africa Assets

“Zain confirms that it is conducting a strategic review of its African Assets with the aim of maximizing shareholders value and will consider approaches that achieve this,” noted Dr Al Barrak further adding that, “We have received expression of interest from several parties/other operators to acquire Zain operations in Africa. The Board of Directors of Zain has been discussing such matters and will consider any proposals that may be submitted. Further announcements will be made in due course.”

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